1. Consider a bond that promises the following cash flows. The required discount rate is 15%.

Year	0	1	2	3	4
Promised Payments		200	210	220	270

You plan to buy this bond, hold it for 2.5 years, and then sell the bond.

1. What total cash will you receive from the bond after 2.5 years? Assume that periodic cash flows are reinvested at 15%.
2. If immediately after buying this bond, all market interest rates drop to 11% (including your reinvestment rate), what will be the impact on your total cash flow after 2.5 years? How does this compare to part (a)?

c. Assuming all market interest rates are 12%, what is the duration of this bond?